Qualcomm Incorporated QCOM reported strong second-quarter fiscal 2025 results, with both adjusted earnings and revenues beating the Zacks Consensus Estimate. This was driven by healthy demand trends in Android handsets, automotive and IoT businesses. These metrics improved year over year, led by the strength of the business model, revenue diversification and the ability to respond proactively to the evolving market scenario.

Net Income

On a GAAP basis, net income in the March quarter improved to $2.81 billion or $2.52 per share from $2.33 billion or $2.06 per share in the prior-year quarter. The increase in GAAP earnings was primarily attributable to top-line growth.  

Quarterly non-GAAP net income came in at $3.17 billion or $2.85 per share compared with $2.76 billion or $2.44 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 2 cents. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.) 

Revenues

On a GAAP basis, total revenues in the fiscal second quarter were $10.98 billion compared with $9.39 billion in the prior-year quarter. 

Non-GAAP revenues in the reported quarter were $10.84 billion compared with $9.34 billion a year ago. The quarterly revenues beat the consensus mark of $10.67 billion. 

Segment Results

Quarterly revenues from Qualcomm CDMA Technologies (QCT) increased to $9.47 billion from $8.03 billion, driven by strength in the automotive platform and higher demand in handsets and the IoT business. The segment’s revenues exceeded our revenue estimates of $9.19 billion. The company witnessed solid market traction in the EDGE networking business that helps transform connectivity in cars, business enterprises, homes, smart factories, next-generation PCs, wearables and tablets.

Automotive revenues rose 59% year over year to $959 million, driven by increased content in new vehicle launches with its Snapdragon Digital Chassis platform. During the quarter, Qualcomm secured 30 new designs, including five ADAS (Advanced Driver Assistance System) programs and designs from Chinese automakers such as Nio, Zeekr, Great Wall, Dongfeng and more. 

Handset revenues were up 12% year over year to $6.93 billion, reflecting the benefit of increased premium-tier Android shipments. IoT revenues were up 27% year over year to $1.58 billion, driven by high demand for products with connectivity, processing and AI technologies. EBT margin for the QCT segment improved to 30% from 29%.

Qualcomm Technology Licensing (QTL) revenues remained flat at $1.32 billion. The segment’s revenues matched our estimates of $1.32 billion. EBT margin declined to 70% from 71%.

Cash Flow & Liquidity

Qualcomm generated $7.14 billion of net cash from operating activities in the first six months of fiscal 2025 compared with $6.5 billion a year ago. At the quarter-end, the company had $7.2 billion in cash and cash equivalents and $13.3 billion of long-term debt. The company repurchased 11 million shares for $1.7 billion during the quarter. 

Q3 Guidance

For the third quarter of fiscal 2025, Qualcomm expects GAAP revenues of $9.9-$10.7 billion. GAAP earnings are projected to be $2.14-$2.34 per share, while non-GAAP earnings are likely to be $2.6-$2.8 per share. Revenues from QTL are expected to be $1.15 billion to $1.35 billion and EBT margin of 67% to 71%. For QCT, the company anticipates revenues between $8.7 billion and $9.3 billion and EBT margin of 28% to 30%.

QCOM’s Zacks Rank

Qualcomm currently carries a Zacks Rank #3 (Hold). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Altice USA, Inc. ATUS is scheduled to release first-quarter 2025 earnings on May 8. The Zacks Consensus Estimate for earnings is pegged at a loss of 9 cents per share, indicating a decline of 80% from the year-ago figure. 

Bandwidth Inc. BAND is scheduled to release first-quarter 2025 earnings on May 7. The Zacks Consensus Estimate for earnings is pegged at 29 cents per share, indicating an improvement of 7.41% from the year-ago figure. 

Light and Wonder LNW is scheduled to release first-quarter 2025 earnings on May 7. The Zacks Consensus Estimate for earnings is pegged at $1.17 per share, indicating an improvement of 25.81% from the year-ago figure.

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